Jacqueline Runnberg CFP®, First Vice President Wealth Advisor
The new year is here, and it’s time to start looking ahead. Whether your hope for 2019 includes a new home, vacation, retirement or a new addition to the family, it’s a good time to pause and make sure your finances are aligned with your plans.
Financial Actions to Take Now
Each year, we work through a checklist with our wealth management clients to make sure whatever the new year brings, they’re financially prepared for it. Here’s what’s on the list.
#1: Check your emergency savings balance. Since this money is used now and again, it may need replenishing. Also, if your family’s situation and expenses have changed over the past year, revisit your target balance to make sure it’s sufficient.
#2: Compare expected income to expenses. Examine your household’s expected monthly income for 2019 in relation to your anticipated expenditures to see if any adjustments are needed. With the increases in inflation and real estate taxes in many area suburbs, it’s a good time to review the family budget.
#3: Look at your account statements. Volatility in the investment markets during 2018 could have caused your asset allocations to shift. Make sure your portfolio reflects your long-term needs and your tolerance for risk. If it doesn’t, rebalance it to a point where you can sleep comfortably at night.
#4: Preview your 2018 tax bill. The best time to think about the taxes you’ll be paying in 2019 is in 2018 while you still have an opportunity to reduce them. See if you can harvest tax losses in order to offset any capital gains you’ve taken throughout the year. Also, check to make sure you’ve been withholding enough to cover what you will owe in April to avoid penalties.
#5: Calculate your net worth. Knowing where you stand today and comparing that to where you want to be next year, in five years or by the time you reach retirement helps you assess your progress toward your goals. Adding up assets while subtracting liabilities is the quickest way to develop a financial road map.
#6: Reevaluate retirement plan contributions. Speaking of retirement, as you start 2019, look at where your retirement plan stands. Depending on how much longer you’ll be contributing toward this goal, you might want to make adjustments.
#7: Review estate plans, account titles and beneficiaries. Family circumstances can change from year to year. Make sure your estate plans and the titling on your assets—including 401k, brokerage and bank accounts—continues to reflect your ultimate wishes.
#8: Price shop insurance policies. Insurance is an area where needs and rates can change over time. Request new bids on your auto, life and homeowners’ policies to ensure you’re not paying more than you need to for the coverage you require today.
#9: Revisit your charitable giving strategy. Tax changes that took effect in 2018 may impact when you make gifts to charities. Review your strategy with your tax advisor to make sure you’re being generous as well as tax-smart.
#10: Verify that your legal documents are current. Make sure your will, trust, health care directives and power of attorney documents are current, both in terms of who they name and to reflect changes in the legal and tax codes.
Annually reviewing your finances lets you head into the new year with a better idea of what you want to accomplish and how you will do it. If we can be of any help as you do this or if you want to discuss how to develop a plan for achieving your life goals, give us a call at 630-906-2000 or visit us at https://www.oldsecond.com/wealth-management/wealth-management/. Here’s wishing you a prosperous and joyous 2019!
Not insured by the FDIC nor any govt institution; Not a deposit or other obligation of, or guaranteed by, the depository financial institution; Subject to investment risks, including possible loss of principal amount invested.